What is Personal Accident Insurance, and Do You Need It?

What is Personal Accident Insurance? Personal accident insurance provides financial protection in the event of accidental injuries, disability, or death. It ensures you or your family receive a payout or income support in the event of an unexpected occurrence. Whether you're a working professional, business owner, or someone frequently on the go, this coverage provides peace of mind by covering medical bills and lost income. You can buy it as a standalone policy or a rider with your term or health insurance plan.

Last year, India saw over 1,80,000 accidents, and most of them happened without warning. Some led to serious injuries, others to tragic loss of life. But almost every case came with one thing in common: massive, unexpected costs. From hospital bills to surgeries and long recovery periods, the expenses can pile up quickly. So the real question is: how do you protect yourself from that kind of financial hit?

The first thing that comes to your mind would be to buy a personal accident insurance policy. But, is it the right fit for you? At Ditto, we analyze over 5,000 health insurance cases each year, which has given us a thorough understanding of what personal accident insurance is, its coverage, and whether it is a suitable purchase. 

We’ve curated this guide after consulting with our certified advisors, analyzing different lifestyles, and comparing plans from top insurers. This guide unpacks everything you need to know about personal accident insurance: its features, coverage types, claim processes, and exclusions.

Heads up: It takes an average person up to 5 hours to read and analyze a policy and 10 hours or more to compare different plans and decide.

We propose a better alternative: a 30-minute FREE consultation with Ditto’s certified advisors. We have a spam-free guarantee and will never push you to buy a plan. Don’t delay—we have limited slots daily, so book a quick call here before they run out. 

What is Personal Accident Insurance?

Personal Accident Insurance is a safety net that protects you financially if you’re injured, become disabled, or, in worst-case scenarios, pass away due to an accident. 

So, how does it work? Depending on the situation, it either pays a lump sum or reimburses specific costs, such as medical bills or lost income.

You can get this coverage in two ways: 

1) A standalone policy

This gives you more flexibility and higher coverage. You can also customize it to suit your needs. It often comes with extra perks like hospital bill coverage and EMI support if you're unable to work due to an accident.

2) Add-on to an existing term or health insurance plan

If you’re looking for a more budget-friendly option. You can consider adding a personal accident rider to your term or health plan. While the coverage is usually lower than a standalone plan, it still provides meaningful financial support in case of accidental injuries or death. 

At the end of the day, personal accident insurance isn’t just about money but the peace of mind it can bring in certain scenarios. It helps you focus on recovery (or support your loved ones) without having to worry about the financial strains that accidents can cause.

Understanding how personal accident insurance works can make all the difference when an unexpected event disrupts your life.

Should You Buy a Standalone Personal Accident Insurance Policy? Here’s what a senior advisor, Swapnil Shinde, at Ditto recommends: Before you consider purchasing a separate personal accident insurance plan, ask yourself, “Does my current coverage already meet my needs?” Term insurance plans cover all kinds of death, including accidental death. In the case of health insurance, all policies typically cover accidental injuries by default, effective from the first day. Additionally, you can often improve your existing health insurance with an Accidental and Total Permanent Disability rider for more comprehensive protection. So, what should you do? In most cases, we recommend this simple order of priorities: 1. Health insurance first: It already covers hospital expenses due to accidents. 2. Term life insurance: Especially if you have, or are planning to have, financial dependents. 3. Accidental disability coverage: Either through a rider or a standalone plan, depending on specific needs. This approach helps avoid unnecessary overlap and ensures you’re covered effectively without extra cost.

So, when does a personal accident cover become important?

A customer, who works as a delivery executive, recently contacted us. He has a large family of 6 that depends entirely on his income, but due to his limited earnings, he hasn’t been able to get a comprehensive term insurance policy. Additionally, his job requires him to be on the road all day, making him vulnerable to the risk of accidents. 

Traditionally, we wouldn’t recommend this plan. Still, we suggested a personal accident insurance policy to him because, in his scenario, it was a cost-effective solution that could provide financial protection against injuries and disabilities. 

Next, let’s break down the features of a personal accident policy to see if they’re a fit for you.

What Are the Different Types of Personal Accident Policies?

Personal accident insurance policies are generally categorized based on the coverage scope and the number of people insured. So, which one makes more sense? Understanding these types helps you choose a plan that aligns with your personal or organizational needs. The two main types of personal accident policies are:

1) Individual (Retail) Accident Cover

This policy is designed just for you.

An individual accident policy provides financial support if the insured gets injured, becomes disabled, or passes away due to an accident. It typically covers medical expenses, income loss during recovery, and long-term care if needed.

Here’s where it stands out:

• Customizable coverage tailored to your lifestyle
• Higher sum assured compared to group plans
• Ideal if you’re self-employed, a freelancer, or just want more control over your protection.

Basically, it’s a strong, personalized safety net when you’re on your own.

Let’s look at some individual personal accident plans offered by the leading insurers in the market.

Plan Name	Key Features
Bajaj Allianz Personal Accident Plan	Covers Death, PTD, PPD, and TTD under Basic/Wider/Comprehensive plans Children’s education bonus (₹5,000 per child, max 2 children) Hospital Confinement Allowance: ₹1,000/day (max 30 days) Medical Expenses: Up to 40% of valid claim or ₹5L Cumulative Bonus: 10% per year (max 50%)
HDFC Ergo Accident Protection Plan	Comprehensive coverage: AD, PTD, PPD, TTD, Hospitalization (inpatient & outpatient) Over 30 optional/add-on benefits including Education Fund, Coma, Prosthetics, Pet Care, Burns, Trip Cancellation Sum Insured: ₹1L to ₹5 Cr TTD up to ₹5L; AD/PTD/PPD up to 25x annual income 5% No Claim Bonus (max 50%)
Aditya Birla Active Secure	5 plan options from AD-only to full-featured (PPD, PTD, Orphan Benefit, etc.) Weekly TTD payout up to ₹50,000 (optional) Education Benefit: 10% of SI (max ₹10L) Optional Add-ons: EMI Protect, Loan Cover, Coma Benefit, Burns, Adventure Sports Cumulative Bonus: 5% per year (max 50%)

2) Group Accident Cover

This is usually provided by employers to their employees as part of workplace benefits. It’s a more cost-effective option that gives essential protection, which is essentially useful if you haven’t taken out your own personal plan.

Here’s what you can expect:

• Basic coverage for accidental injuries or death
• Affordable for employers since it’s usually offered in bulk
• May not provide extensive or customizable benefits

This type of policy may not cover everything, but it can serve as a valuable supplement to an individual plan.

After comparing the two types of policies, we’ve seen that group personal accident insurance plans come with several drawbacks. 

• They are subject to changes in employment. So, if you leave the company or retire, you’ll be left unprotected.
• They are in complete control of the policyholder. This means you cannot modify any terms of the policy to suit your specific needs.

Personal accident insurance comes in two primary forms, individual and group. While individual policies offer personalized and extensive coverage, group policies provide an economical option with essential protections for employees. And as discussed above, the latter’s economical price comes with a few important caveats.

We’ll now take a closer look at the coverage details of personal accident insurance.

But before we do that, if you’d rather watch a video covering the best personal accident insurance plans:

Coverage Details for Personal Accident Cover

While personal accident insurance broadly protects against injuries and accident-related losses, understanding the exact scope of coverage helps you assess whether a plan meets your needs. Here's a closer look at what standard policies typically include, along with an explanation of how these benefits are structured.

1) Accidental Death Benefit

Most insurers offer a 100% payout of the sum insured if the policyholder dies as a result of an accident. This lump sum goes directly to the nominee and is tax-free under Section 10(10D) of the Income Tax Act 1961. This applies regardless of whether the policyholder is under the old or new tax regime. 

2) Permanent Total Disability

In cases of life-altering injuries, such as the loss of both limbs or total blindness, the policy typically pays out the full sum insured. However, coverage may vary based on whether the disability is certified by a registered medical practitioner and meets the insurer’s definitions.

According to the IRDAI guidelines, if the policyholder experiences permanent total disability within 12 months of the accident, they’re eligible for a benefit equal to 100% of the sum insured if the injury disables the insured person from engaging in any employment or occupation.

Here’s a list of what’s covered:

1. Total and irrecoverable loss of sight of both eyes
2. Physical separation or loss of use of both hands or feet
3. Physical separation or loss of use of one hand and one foot
4. Loss of sight in one eye and physical separation of the loss of use of a hand or foot
5. If an injury, as a direct consequence, permanently and totally disables the insured person from engaging in any employment or occupation of any description whatsoever.

3) Permanent Partial Disability

These benefits are often dependent on the severity of the injury. For example, the loss of one hand may result in a 50% payout, while the loss of a thumb could be rated at 25%. Each insurer maintains a schedule of benefits, so it's crucial to review this chart before buying.

According to the IRDAI guidelines, the payout applies when

• The disability must be irreversible and directly caused by an accident within 12 months of the date of the accident.
• The claim must be filed within 30 days of the date of disablement.
• Medical certification by a qualified practitioner, confirming the permanence, is required.

To learn more about the percentage breakdown of different types of losses, refer to the official IRDAI circular. 

4) Temporary Total Disability (TTD)

Policies generally offer weekly compensation up to a specified limit (e.g., 10 weeks). This is especially helpful for self-employed individuals or those without sick leave benefits.

To gain more clarity about the income payout, we reviewed IRDAI’s guidelines on personal accident insurance, and they state that at the time of the Accident (or temporary total disablement), the compensation payable will be at the rate of 0.2% of the insured per week, till the time the insured can return to work. 

5) Hospitalization Expenses

Some plans include accident-related medical expenses, but the extent of this coverage can vary. It may be capped at a percentage of the sum insured or require a co-payment, or limit the kind of room that can be selected. Look out for whether day-care procedures or ambulance costs are included.

To help you out, we researched some personal accident plans and their offerings, this is what we found out:

In the HDFC Ergo Individual Personal Accident Plan, Care Secure & Aditya Birla Activ Secure, there is no room rent limit, no co-pay, and no specific exclusions for daycare procedures related to accidental treatments. All expenses are covered up to the applicable sub-limits or sum insured, provided the claim is accident-related and meets the plan's terms.

In short, personal accident insurance offers fixed payouts for accidental death or disability and weekly income support for temporary loss of work. As these can vary depending on the type of loss, it’s crucial to review payout caps, medical requirements, and benefit schedules closely.

With that in mind, let’s see if there are any additional benefits that a personal accident insurance policy can offer.

Are There Any Additional Benefits of Personal Accident Insurance?

Beyond the standard protections for death, disability, and hospitalization, many personal accident policies include optional or built-in benefits that can provide meaningful support during recovery or loss. These add-ons can reduce out-of-pocket expenses and ease the burden on families during difficult times. Here are some commonly offered additional benefits:

1) Daily hospital cash allowance

Offers a fixed daily amount during hospitalization to cover incidental expenses, such as food, transportation, or non-medical costs that aren’t included in regular hospitalization coverage.

Although IRDAI has no specific guidelines on the daily amount to be paid, it does mention that hospitalisation expenses arising from accidents can be paid up to 10% of the base sum insured. 

2) Education allowance for dependent children

If the insured suffers death or permanent total disability, some policies provide a one-time lump sum to support the educational continuity of dependent children.

According to the IRDAI guidelines, if a policy provides an additional educational allowance benefit, the insurer must pay a one-time grant of 10% of the base sum insured, per child, to all dependent children of the insured.

However, this is only applicable if the dependent children are under 25 years old and are enrolled in a full-time educational course. 

3) Ambulance charges reimbursement

IRDAI mandates that under the hospitalisation expenses due to accident optional cover, the policy should include reimbursement for road ambulance charges, subject to:

1. A maximum cap of ₹2,000 per hospitalisation.
2. Reimbursement only when the hospitalisation is due to an accident

Personal accident insurance plans offer more than this, depending on the variant and the sum insured opted for. For example, some premium variants, such as the HDFC IPA plans 'Elite Variant, also cover air ambulance costs, provided they are medically necessary.

4) Funeral charges

A small fixed benefit to help the family manage immediate post-death expenses like funeral arrangements or body transport.

It’s important to note here that IRDAI’s standard guidelines do not require funeral expense coverage. There’s no fixed amount mandated for funeral or body transport costs. However, insurers can still opt to include small funeral benefits as an add-on to the standard product. 

5) Loan protection in case of death or disability

While the IRDAI does not mandate automatic loan or EMI payouts under standard personal accident policies, insurers may offer these protections as optional add-ons. These covers are not included by default and must be explicitly selected by the policyholder based on their financial profile and liabilities.

Together, Loan Protect and EMI Protect provide a layered safety net, ensuring both lump sum loan settlements and ongoing EMI support, helping families stay financially stable during difficult times resulting from accidental injuries or loss.

Some personal accident insurance plans, such as Activ Secure by Aditya Birla Health Insurance, offer optional covers like Loan Protect and EMI Protect to safeguard an individual’s financial obligations in the event of a serious accident. These benefits are particularly valuable in ensuring that existing debts, whether long-term loans or monthly EMIs, do not become a financial burden on the insured or their family.

6) Mobility and rehabilitation support

Covers the cost of assistive devices, such as wheelchairs, prosthetics, or home modifications, required due to a disability.

7) Reconstructive surgery cover

Some policies reimburse the cost of cosmetic or reconstructive surgeries needed due to disfigurement or injury resulting from an accident.

For example, in the Care Secure Plan, this benefit is included in the higher variants: Secure 3 and Secure 4. These cover such surgeries up to ₹10 lakh and ₹20 lakh, respectively, provided the procedure is done within 30 days of the accident and the associated disability claim (PTD or PPD) has been approved. 

To summarize, benefits in personal accident insurance are designed to address real-world needs. These extend beyond medical bills, offering support for children, debt obligations, mobility, and maintaining dignity during recovery or in the event of loss. But not all are included by default so read the fine print or consult with one of our expert advisors before assuming you're covered.

While personal accident insurance provides comprehensive protection, it’s equally important to understand what it doesn’t cover. Let’s look at the standard exclusions to avoid surprises at claim time.

What Are the Exclusions in Personal Accident Insurance?

While personal accident insurance offers broad protection, there are specific scenarios and conditions under which claims will not be honored. Being aware of these exclusions is essential to avoid claim rejections and choose the right policy for your lifestyle. Common exclusions include:

1) Self-Inflicted Injuries or Suicide Attempts

Any harm caused intentionally, including suicide attempts or acts of self-harm, is excluded from coverage, even if it results in disability or death.

2) Accidents Under the Influence of Alcohol or Drugs

If the insured was intoxicated or under the influence of non-prescribed narcotics at the time of the accident, the claim is typically invalidated. 

3) War, Terrorism, or Civil Unrest

Injuries or death resulting from participation in war-like operations, terrorist attacks, riots, or civil commotion are not covered under standard policies.

4) Hazardous or Illegal Activities

Participation in adventure sports (like skydiving, racing, or mountaineering) or involvement in unlawful acts at the time of the incident will generally void coverage. 

5) Pregnancy-Related Complications or Childbirth

Medical issues arising from miscarriage, pregnancy, and childbirth, are excluded from personal accident coverage.

Personal accident insurance is not a catch-all policy; it excludes incidents involving intentional harm, substance use, unlawful activities, or high-risk behavior. Knowing these limitations can help prevent claim surprises and guide more informed policy choices.

Next, let’s see how personal accident insurance compares with life insurance or critical illness insurance.

Personal Accident vs. Life Insurance vs. Critical Illness Insurance

A life insurance policy covers the death of the policyholder, irrespective of the cause of death. On the other hand, a personal accident insurance policy only covers disabilities or deaths arising from an accident. 

Let’s compare the two.

Feature	Personal Accident Insurance	Life Insurance
Purpose	Provides financial protection in case of accidental death or disability.	Provides financial support to beneficiaries in the event of the insured's death (any cause).
Trigger	Only triggered by accidental events (e.g., injury, disability, or death due to an accident).	Triggered by death due to any reason (illness, accident, natural causes, etc.).
Death Coverage	Covers accidental death only.	Covers all causes of death, unless explicitly excluded (e.g., suicide within a waiting period of 1 year).
Disability Coverage	Covers temporary or permanent disabilities from accidents.	Not typically included unless added through riders.
Medical Coverage	May include reimbursement for medical expenses resulting from accidental injuries.	Does not cover medical expenses.
Policy Term	Usually short- to medium-term (renewable annually or for fixed periods).	Long-term. Includes term life (fixed period) or whole life (lifetime coverage)
Ideal For	Individuals in accident-prone jobs, travelers, or those wanting targeted accident protection.	Anyone with financial dependents needing long-term financial security after their death.

Next, let’s look at how personal accident insurance compares with critical illness insurance.

Feature	Personal Accident Insurance	Critical Illness Insurance
Purpose	Covers accidental death and disability. Helps manage treatment, expenses, and lost income.	Covers major illnesses (e.g., cancer, heart attack). Provides income support during recovery.
Trigger	Activated by a physical injury or death due to an accident.	Activated by a diagnosis of a covered critical illness.
Death Coverage	Only covers death resulting from an accident.	Does not cover death as it only pays upon diagnosis of an illness.
Disability Coverage	Covers both temporary and permanent disabilities	May offer limited disability coverage, depending on the disease.
Medical Coverage	Sometimes includes treatment costs from accidental injuries.	Typically focuses on a lump sum payout, might not cover treatment costs directly.
Ideal For	People are exposed to physical risk or are in accident-prone environments.	People with a family history of major illnesses or limited emergency savings.

So far, this has been an apples-to-oranges comparison since personal accident insurance, life insurance, and critical illness insurance all serve distinct purposes. 

If you’re confused about buying personal accident cover, a better comparison would be to understand whether you should get it as a standalone policy or as an additional rider to your existing health or term plans. 

Aspect	Standalone Policy	Rider (with term or health insurance)
Coverage	Comprehensive: includes income loss, all types of disabilities, and sometimes hospitalization expenses.	Limited: usually covers accidental death and permanent total disability only.
Customization	Highly customizable with optional add-ons and flexible sum insured.	Minimal customization. Comes pre-packaged with fixed benefits.
Cost	More expensive due to broader protection and flexibility.	More affordable. Benefits from bundled pricing, especially with term insurance.
Recommended For	Ideal for high-risk workers, frequent travelers, or individuals requiring comprehensive accident protection.	Suitable for budget-conscious individuals seeking basic protection in addition to their existing term or health insurance.

At Ditto, we often help individuals in high-risk jobs determine whether a rider is sufficient or if a standalone policy offers better peace of mind. For example, someone in  construction, mining, law enforcement, or operating heavy machinery might benefit more from a dedicated cover.

Now that you understand the differences between these coverage types, the next question we’re often asked is: What influences premium costs and eligibility criteria for Personal Accident Insurance?

What is the Premium and Eligibility of Personal Accident Insurance?

The cost of a personal accident insurance policy depends on several risk-related factors and the coverage options chosen. Understanding how premiums are calculated and who is eligible can go a long way in helping you select a policy that suits your needs and budget.

Factors Affecting Premiums

1. Age of the Insured
   Younger individuals generally pay lower premiums, as they are statistically less likely to suffer from disabling accidents compared to older policyholders.
2. Occupation Type
   We usually advise customers to review their occupation class carefully because that’s where premiums can unexpectedly shoot up. It’s a detail most people miss until renewal time. People working in high-risk professions are charged higher premiums due to their increased exposure to workplace hazards.
3. Sum Insured and Add-Ons
   A higher sum insured or the inclusion of optional benefits (such as hospital cash, education allowance, or loan protection) will increase the overall premium. Customization allows you to strike a balance between coverage and affordability.

Profile	Plan	Premiums
35-year-old, low-risk occupation (class 1)	HDFC Ergo Advanced Personal Accident Plan (Base sum assured = ₹1 crore Loan secure cover =₹50 lakhs Additional Benefits: Temporary Total Disability and Accidental Hospitalisation with Restore Benefit)	₹21,973 per year (including GST)
36-year-old, Male, low-risk occupation (class 1)	Plan III under the Activ Secure Personal Accident Policy (Sum Assured = 50 lakhs)	₹17,228 (including GST)
35-year-old, Salaried Individual	Care Secure Personal Accident Insurance Plan Secure 1(Sum Assured = 10 lakhs)	₹900 (plus GST)
35-year-old, Salaried Individual	Care Secure Personal Accident Insurance Plan Secure 2(Sum Assured = 25 lakhs)	₹2,600 (plus GST)

Eligibility Criteria

Most personal accident insurance plans are available to individuals aged 18 to 65, regardless of their employment type. Both salaried and self-employed individuals can apply, and many insurers also offer coverage under group schemes provided by employers.

In short, your age, job type, and coverage choices directly impact your premiums. Most adults aged 65 and under are eligible. The best part? At Ditto, we help strike the right balance between affordability and sufficient protection.

You now have a sense of who can obtain personal accident insurance and what factors affect the cost. But knowing how to use the policy when it matters is just as important.

What Is the Claim Process of Personal Accident Insurance?

Filing a claim after an accident can be stressful, but knowing the process in advance helps ensure a smoother experience. Here’s a typical step-by-step guide curated by our IRDAI-certified advisors:

1) Immediate Notification

Inform your insurer or agent as soon as possible after the accident or injury occurs. Many companies require claims to be reported within a specific time frame (often 24-48 hours).

2) Document Submission

Prepare and submit the necessary documents to support your claim. These generally include:

• Completed claim form (available from the insurer)
• Medical reports and hospital records detailing the injury and treatment
• Police or accident report (if applicable)
• Death certificate, in the event of accidental death
• Proof of identity and policy documents

3) Claim Assessment

The insurer will review all submitted documents and may request additional information or a medical examination to verify the claim’s validity.

4) Approval and Payout

Once verified, the insurer approves the claim and processes the payout. For disability or temporary disability claims, this may involve periodic payments. For accidental death or permanent disability, a lump sum is typically paid to the nominee.

5) Follow-up

Stay in touch with the insurer during the claim process and respond promptly to any requests to avoid delays.

While filing a claim is the last thing you want to worry about after an accident, a little prep can help you go a long way. Here are some tips for a smooth claim process:

• Keep all accident-related documents and medical reports organized and readily accessible.
• Understand your policy’s terms, including any waiting periods or exclusions.
• Notify your employer if you have a group accident insurance plan through your workplace.

Timely notification, proper documentation, and clear communication with your insurer are key to a hassle-free claim experience under personal accident insurance.

Here’s how it played out for one of our customers:

A client came to us after an accident. She was already overwhelmed, juggling hospital visits and urgent responsibilities at home, including caring for an elderly parent. Filing an insurance claim was the last thing she had time or energy for.

So, we stepped in.

She handed over all the necessary documents, and we took over the entire claims process of coordinating with the insurer, ensuring everything was submitted on time, and following up regularly. The claim was processed smoothly without delays, and she was able to focus on what truly mattered without the added stress.

Filing a claim can be exhausting. There's often a lot of to-and-fro with the insurer, requests for clarification, and pressure to meet deadlines. But you don’t have to do it alone.

At Ditto, we guide our customers every step of the way. All you have to do is hand us the documents, and we’ll handle the legwork.

Need claims assistance? Set up a call with us. 

Next, let’s look at the tax benefits of personal accident insurance.

What Are the Tax Benefits of Personal Accident Insurance?

Personal accident insurance by itself does not typically qualify for tax deductions. However, suppose your accident coverage is bundled with a comprehensive health insurance plan. In that case, you may be eligible for tax benefits under Section 80D of the Income Tax Act, applicable to the old tax regime. Under the new tax regime, such deductions aren’t available. 

Final Thoughts

While health insurance plans cover accidental hospitalizations and injuries, and term insurance plans cover death due to accidents, personal accident insurance can sometimes prove to be crucial. This is especially true for individuals in high-risk professions. Here are a few key takeaways from the entire blog:

Key Takeaways:

1. Personal accident cover provides a financial safety net against accidental injuries, disabilities, and death.
2. It can be purchased individually or as an add-on to health or term insurance for flexible protection. Our advisors usually recommend the rider as most health and term plans cover most accidental expenses.
3. Understanding coverage details, exclusions, and claim processes helps you choose the right plan.

Are you unsure which plan is the best fit for you? Don’t worry, we’ve got your back at Ditto. Book a free call with us today.

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